In April 2002, the IRS issued final regulations on minimum required distributions (MRD) from IRAs and other tax-deferred retirement plans. They include a new table with longer life expectancies, thus permitting smaller withdrawals.
Under the old table, a 71-year-old IRA owner had a joint life expectancy of 25.3 years. Now, it’s 26.5 years, which means you can withdraw $3,774 from a $100,000 IRA, rather than $3,953. (Although the difference may seem slight, over a long retirement these changes can substantially reduce your annual tax bills and increase the amount that can be retained inside an IRA.)
If your beneficiary is your spouse, who is more than 10 years younger than you are, you can use an even longer life expectancy and take a smaller distribution. At age 71, with a 59-year-old spouse as beneficiary, you can withdraw as little as $3,585 from your IRA without having to pay a 50 percent penalty for insufficient withdrawals.
